The pound has maintained its strength against both the euro and the dollar this morning, despite political unrest in Downing Street.
Reports this morning reveal that senior Conservative MPs are calling for Boris Johnson to resign. This follows news that he attended an event at Downing Street in May 2020, something that Johnson admitted to in the House of Commons yesterday.
However, Ministers are urging MPs to wait for the outcome of Sue Gray’s report before taking any action.
The euro is stronger against the dollar this morning, partly due to dollar weakness. This follows the release of US inflation figures yesterday, which were largely in-line with forecasts. The data showed that November saw the largest annual increase in core consumer prices since 1991.
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GBP: Pound still strong against euro and dollar
The pound is still strong against the euro and dollar this morning, so far proving resilient against the political unrest in the UK. This is a sign that the market thinks the possibility of Boris Johnson resigning is low, despite senior Conservative MPs calling for him to stand down.
Yesterday, the Prime Minister admitted to attending a social event in Downing Street during the first lockdown in May 2020. He apologised but added that he thought he was at a work event.
There are no economic data releases for the UK today, but tomorrow we’ll see the release of GDP figures and industrial production. November’s GDP data is expected to have improved month-on-month.
GBP/USD past year
EUR: Euro strengthens against dollar
The euro is stronger against the dollar this morning, reaching its highest level since November. The eurozone’s high inflation figure, which was released last week, is offering support to the single currency due to increasing expectations that the European Central Bank will hike interest rates.
Dollar weakness has also helped the euro strengthen against it.
Today, there will be more speeches from European Central Bank officials. The markets will be listening for comments surrounding inflation, interest rates and monetary policy.
USD: Dollar weaker following inflation figures
The dollar has weakened this morning following the release of US inflation data yesterday. Despite inflation coming in as expected, it did not exceed expectations. The markets had priced this in and so the greenback has weakened.
Inflation came in at 7% year-on-year as expected. Energy was the biggest contributor to the gain, but the rise was smaller than in November. Core inflation came in at 5.5%, slightly above forecasts of 5%. This was the largest annual increase in core consumer prices since February 1991.
Jobless claims figures for the US will be released today followed by retail sales figures tomorrow.